India Budget 2019: The benefit of lower corporate tax rate of 25% which was earlier available to companies having turnover of Rs. 250 crores has now been extended to companies having turnover of Rs. 400 crores.
- By V Lakshmikumaran
India Budget 2019: After the re-election of the Government, Budget 2019 has been long awaited as the India Inc. was espoused with high desires and expectations out of the budget. Millions of eyes were glued to television sets to see the much-awaited budget to be presented by the first woman full-time finance minister. The Budget was focussed on promoting affordable housing, encouraging use of renewable sources of energy and to simplify procedures and incentivize performance.
Several significant amendments have been made to the income-tax Act, 1961. The benefit of lower corporate tax rate of 25% which was earlier available to companies having turnover of Rs. 250 crores has now been extended to companies having turnover of Rs. 400 crores. As per the Finance Minister, the increase in threshold will now entitle 99.3% of the total companies to the benefit of reduced corporate tax rate. Also, the return filing has been rationalised by permitting quoting of Aadhar Number as an alternative to PAN. In order to bolster faceless e-assessments, it has been proposed that the notices will be issued by a Central Processing System and that the anonymity between the taxpayer and the Assessing Officer will be maintained. To incentivise IFSC, exemptions from tax on distribution of dividend and 100% profit linked deductions have been introduced. In order to invite fresh investment, investment linked deductions have been proposed in certain sectors like semi-conductor fabrication, lithium storage batteries, computer servers, laptops etc. To resolve the angel tax issue, various incentives have also been given to start-ups including shield from income tax scrutinies.
In order to encourage digital transactions, withholding tax at the rate of 2% is proposed to be introduced on cash withdrawals above one crore rupees. Further, increased rate of surcharge has been introduced for high net worth individuals. The surcharge now varies between 10% to 37% depending upon the income of the taxpayer.
On indirect tax end, simplification has been made in GST process by rolling out simplified single monthly returns. Further a more welcoming approach to settle long pending despite under the erstwhile excise and service tax law, has been made by introduction of legacy dispute resolution scheme. The scheme is attended to achieve tax collection while avoiding protracted litigation.
Amendments have also proposed to Customs Tariff Act. Customs duty reduction is proposed on certain raw material and capital goods to promote domestic manufacturing. The duty on import of digital cameras, gold, cashew kernels has been increased. Changes have been made in the customs to promote make in India by increasing custom duties on certain items and withdrawing exemptions.
The Budget promises significant benefits to the MSME’s and the individuals in lower and middle sectors. Apart from that the Budget aims to increase the flow of fresh FDI in India by improving infrastructure and offering tax incentives. However, it seems that these benefits are financed by the high net worth individuals and blue-chip companies.
- V Lakshmikumaran is Managing Partner, Laxmikumaran & Sridharan Attorneys.